2:44pm: Australia's share market has kicked off the week with modest gains, thanks to two of the big banks, while SAI Global surged after receiving a private equity takeover bid.

The benchmark S&P/ASX 200 Index nudged up 20 points, or 0.4 per cent, to 5512.8 points, while the broader All Ordinaries finished 20.1 points up, or 0.4 per cent, to 5490.4 points.

Commonwealth Bank shares hit a new record high, rising 25¢, or 0.3 per cent, to $81.56, while ANZ firmed 7¢, or 0.2 per cent, to $33.67. NAB and ANZ meanwhile eased 5¢, or 0.2 per cent, to $33.52 and 3¢, or 0.09 per cent, to $34.16 respectively.

Despite the top four banks propelling the bulk of a market rally since February, as investors look for high yielding assets, several analysts have called for caution.

According to Morgan Stanley, the risks for the big banks are skewed to the downside. The investment bank said trading multiples are full, volume growth is hard to find and competition is increasing.

''While the probability of material earnings downgrades remains relatively low, we think dividend growth will slow and the potential for a meaningful de-rating is rising,'' Morgan Stanley said in a note to investors.

But not all banks were equal. Commonwealth Bank, the biggest company on the ASX, was Morgan Stanley's bank of preference, saying ''business mix, franchise momentum and cost flexibility will drive above-peer EPS growth and upgrades to consensus estimates, supporting CBA's premium trading''.

In contrast, Morgan Stanley said NAB was underperforming and it with loan loss normalisation complete it expected profit and dividend growth to slow.

Deutsche Bank also has an underweight recommendation for the banks. Analyst Tim Baker said while he was comfortable with the earnings forecast for the top for banks, with about 5 per cent growth, they were too expensive.

The ASX also had some help from the mining sector, particularly BHP Billiton, which added 26¢, or 0.7 per cent, to $37.91.

No surprise to see SAI Global at the top of the pile, after a bid from private equiteers PEP put some pep in the share price. Lynas shares also jumped as the rare earths miner finished a share buyback program.

Regis Resources lost some more off its share price, as analysts abandoned the gold miner.

2:34pm:Banks and miners have pushed the ASX 200 up 0.4 per cent, or 20 points, to close at 5512.8. The All Ords was up a similar amount to 5490.4.

BHP was the biggest contributor to the benchmark index's gains, up 0.7 per cent. Rio finished 0.7 per cent higher.

Performance among the banks was mixed. CBA and ANZ were 0.3 and 0.2 per cent higher, respectively, and Macquarie jumped 1.6 per cent. But NAB fell 0.2 per cent and Westpac 0.1 per cent. Telstra slumped 0.7 per cent.

2:08pm: Back to iron ore, and the spreadsheet cowboys at Credit Suisse have run through their models what lower prices assumptions - $US80/tonne and $US70/tonne (currently at $US97.50/tonne) - imply for the estimated fair value of BHP, Rio and Fortescue shares:

Rio:

“Fine at $US80/tonne, although not obviously cheap”, the analysts write. Their models put fair value for the shares at $65 (currently $60.87) and P/Es sit around 13x, before contracting to 11x on volume increases and recovery in other currently depressed commodity prices.

Operationally still fine at $US70/tonne, but valuation becomes an issue: under this scenario Rio is worth $52 a share and P/Es rise to above 15x.

BHP:

The impact is smaller but looks relatively expensive on most metrics. BHP fares better on discounted cash flow modelling (DCF) given the smaller weighting to the bulk commodity, declining to $35 per share at $US80/tonne iron.However, P/Es immediately jump to 18x in FY15 and are above 14x going forward.

At $US70/tonne, BHP looks expensive on DCF ($31 a share) and earnings, never going below 16x on P/E.

Similar to Rio, there is not much risk on a company level as iron ore still generates significant cash.

Fortescue:

FMG a special case, but thanks to improved costs and lower debt, it can survive a lot more pain than most investors might think, the analysts write.

The focus is all on cash and whether FMG can continue to pay down debt - FMG will struggle on a $US70/tonne iron ore price but be fine at virtually any other level.Debt can be paid down at $US80/t or above—this is also the price point at which we estimate FMG would be roughly fair value.

At $US80/tonne, fair value hits $5 a share. At $US70, fair value is at $1.40.

1:55pm: The Australian Prudential Regulation Authority today released new draft guidelines setting out what it expects from banks in the home loan market, the banking sector’s single biggest credit exposure.

With banks competing fiercely for new business in an environment of record low interest rates and rising house prices, APRA chairman John Laker said there had been an increase in higher-risk lending and mortgages.

“In this environment, APRA is seeing increasing evidence of lending with higher risk characteristics and it does not want this trend to continue,’’ Dr Laker said.

Mortgages have proven highly profitable for banks in recent years due to low default rates, but APRA said the boom time conditions could result in risks being overlooked.

‘‘Lengthy periods of economic growth combined with low interest rates and a sustained period of rising house prices can create a sense of complacency among residential mortgage lenders,’’ it said.

Mortgage lending accounts for more than half the credit exposure of the Australian banking system.

One way in which banks have sought to increase their market share is by increasing incentives paid to mortgage brokers.

APRA said banks should make sure these do not lead to extra risk taking, noting that larger up-front commissions encouraged brokers to pay less attention to loan quality.

The guidance also touched on lending standards, saying it expected banks to closely monitor the share of new loans with high loan-to-valuation ratios (LVRs). While Australia has no caps on LVRs, it said those above 90 per cent clearly exposed banks to a higher risk of losses.

1:47pm:Chinese steel and iron ore futures have risen to one-week highs as battered prices regain some ground, although the outlook for demand remained shaky.

Both rebar in Shanghai and iron ore in Dalian plunged last week as supply of the two commodities outpaced demand in top consumer China where the economy is expanding at a slower pace as the government pushes reforms aimed at more sustainable growth.

The most-active rebar for October delivery on the Shanghai Futures Exchange touched a session high of 3,147 yuan ($US500) a tonne, after falling to a low of 3055 yuan on May 21. It was up 1.7 per cent at 3135 yuan by midday.

"I don't see this rebound as a trend. I think people who are short on steel futures will continue to be short," said Helen Lau, mining analyst at UOB-Kay Hian Scurities in Hong Kong.

While Chinese mills have kept steel production high, traders have been running down their stocks, opting to unload products at low prices instead, she said.

"There's too much supply and traders want to transfer the inventory risk to the end-user that's why they're unloading at lower prices," said Lau.

Iron ore for delivery in September on the Dalian Commodity Exchange gained 1.1 per cent at 719 yuan a tonne after peaking at 729 yuan. The contract fell to a record low of 695 yuan last week.

Buying interest for spot iron ore cargoes remained thin, with prospective buyers waiting for a further decline in prices, traders said.

"The market is still generally well offered," said a trader in Singapore. "There's a lot of available supply and some of the mills are opting for cargoes at the ports which are cheaper."

Iron ore for immediate delivery to China fell 1.3 per cent to $US97.50 a tonne on Friday, matching the level on May 20 which was the first time the raw material dropped below $US100 since September 2012.

1:24pm: Private equity firm, Ironbridge, has launched the IPO of its fertility business, Monash IVF Group, with a capital raise of between $267 million and $298 million.

Depending on the show of support from investors, the cash call will give the company a market capitalisation of between $392 million and $442 million.

Monash IVF shares will be priced between $1.65 and $1.95.

The company’s stock market debut comes almost a year after Quadrant listed its infertility business, Virtus Health, which ranked as one of the best IPOs of 2013 and enabled its private equity backers to fully exit.

According to the term sheet sent to prospective institutional investors, Monash’s shift into public ownership, will help repay existing bank debt as well as lift the company’s profile.

Monash’s stock market debut is scheduled for Tuesday June 24.

The company’s value has been set at a multiple of 15.1 times to 17 times 2015’s profits.

Its indicative forecast 2015 yield will hit 3.8 per cent to 4.3 per cent.

1:11pm: The financial regulator has warned banks not to become complacent about potential risks in the $1.3 trillion mortgage market, amid signs banks are increasingly engaging in higher-risk lending.

The Australian Prudential Regulation Authority today released new draft guidelines setting out what it expects from banks in the home loan market, the banking sector’s single biggest credit exposure.

With banks competing fiercely for new business in an environment of record low interest rates and rising house prices, chairman John Laker said there had been an increase in higher-risk lending and mortgages.

‘‘In this environment, APRA is seeing increasing evidence of lending with higher risk characteristics and it does not want this trend to continue,’’ Laker said. ‘‘The draft prudential practice guide reinforces the importance of maintaining prudent lending standards when competitive pressures may tempt otherwise."

Mortgages have proven highly profitable for banks in recent years due to low default rates, but APRA said that the boom time conditions could result in risks being overlooked.

‘‘Historically, residential mortgage exposures have exhibited low default and loss rates. However, lengthy periods of economic growth combined with low interest rates and a sustained period of rising house prices can create a sense of complacency among residential mortgage lenders,’’ it said.

Mortgage lending accounts for more than half the credit exposure of the Australian banking system.

If I had to whittle this down to one issue here which could have more far reaching implications it would have to be proceedings in Greece, with Syriza leader Alexis Tsipras broadcasting that the fact that his party polled better than the current ruling coalition (New Democracy) was a message against austerity.

Tsipras has called for a snap election, and while we haven’t heard a response on this call from the current prime minister, there is potential for Greece to negatively impact markets that have been seeing improvement in its economy, been access to the bond market for funding and even a credit rating upgrade.

Will the days where investment banks put odds on Greece (GREXIT) leaving the European monetary Union (EMU) resurface?

12:42pm:China’s biggest homebuilding slump in at least four years isn’t enough to dissuade a majority of economists from predicting real estate will still contribute to 2014 growth. Property controls will be eased, they said in a Bloomberg survey.

While 12 of 18 economists say China has some national oversupply of housing, only seven say the market is in a bubble state countrywide, according to the survey conducted from May 15 to May 20. Half see bubbles in some cities, and a majority says the loosening of restrictions on home purchases and loans will be limited to a regional level.

New construction has fallen 22 per cent and sales have slumped 7.8 per cent this year, testing the government’s four- year commitment to curbs targeted at making homes more affordable and its reluctance to enact broader economic stimulus. The slowdown’s depth will have implications for everything from demand for Australian iron ore to land sales that help local governments repay their $3 trillion of debt.

“China won’t fully lose the engine, but the engine will roar less than in the past and will be a more moderate supporter for growth,” says Louis Kuijs, Royal Bank of Scotland’s chief Greater China economist in Hong Kong, who formerly worked at the World Bank.

12:16pm: It's not every day a chief executive is dumped, but for Stephen Porges, the outgoing boss of SAI Global and a former boss of Aussie Home Loans and Newcastle Permanent Building Society, a package of upwards of $1.35 million has just floated away.

While he is to work out his six month notice period, it is unlikely he will be picking up any bonuses on the way through. He was hired late last year on a fixed salary of $900,000, with a short term incentive plan of half the fixed pay.

Then there were to be additional long term incentives which shareholders were to vote on at the annual general meeting later in the year, although details of these have not been made public.

He was dumped for not moving quickly enough to build stronger growth from the group's sprawling asset base.

"He has an excellent blend of CEO experience, international exposure, finance, biotech, start-up and IT process," shareholders were told when Porges was appointed to the top job. "This is a combination that will serve our company well."

12:07pm: Let’s take a quick trip to Singapore, where 39 per cent of locals surveyed by broker CIMB said they expected house prices to fall in the coming year or two, which was the main reason why only 14 per cent of respondents expect to buy a property within the next year or two.

“We believe that buyers are holding back their purchases as they wait for property prices to fall,” write the CIMB analysts in a note to clients.

“That could leave us with a less-than-ideal situation of weak demand on top of rising supply with historically high physical completions over the next three years.”

Affordability is “not an issue’, as “both the mortgage-to-income ratio and median home price-to-income ratio remain near the historical trough”.

The analysts go on to point out that most of the surveyed buyers in Singapore also expect home prices to fall only “a little”.

The extra yield over sovereign notes that AAA-rated companies pay to sell three-year bonds has dropped 60 basis points since March 31 to 126 basis points, the most for any quarter in Bloomberg-compiled data going back to 2007.

Falling borrowing costs have encouraged 1.005 trillion yuan ($US161 billion) of onshore yuan debt offerings in the period, poised to surpass 1.012 trillion yuan in the whole of the first quarter.

The expanding bond market is helping Premier Li Keqiang as he seeks to staunch off-balance sheet lending known as shadow banking while ensuring companies get enough cash to avoid default as manufacturing activity and the property market cool. The PBOC pumped 120 billion yuan into the economy last week, the most since January.

“Investors’ risk appetite is rising while expectations about defaults are diminishing,” said Xu Hanfei, a bond analyst in Shanghai at Guotai Junan Securities Co. “The central bank wants to maintain an appropriately loose environment to prevent explosion of regional or systematic risks.”

11:35am: There would be ‘‘significant detriment’’ if AGL’s proposed purchase of the country’s largest power generator, Macquarie Generation, was to proceed, while public benefits would be ‘‘small’’ and would likely to accrue to AGL, not consumers, the competition watchdog has warned.

The Australian Consumer and Competition Commission has blocked the planned acquisition, with the Australian Competition Tribunal now to decide whether it should proceed.

‘‘The public benefits that are likely to result from the proposed acquisition are small,’’ the ACCC said in its submission to the Tribunal. ‘‘The benefits ... would largely accrue to AGL and are extremely unlikely to be shared with the broader community.’’

AGL is one of the country’s largest power generators and retailers already, and its position would be strengthened if the acquisition was allowed to proceed.

Earlier, the consumer lobby group Choice warned that if AGL was allowed to buy Macquarie Generation, that households would lose out.

11:13am: The heated battle between Virgin Australia and Qantas over domestic market capacity is showing signs of cooling, with Virgin cutting the number of available seats.

The two airlines had been aggressively increasing the number of domestic flights and the size of planes on longer routes, with Qantas desperate to protect its market share, at the expense of profit. But Virgin's latest monthly operating statistics suggest a cease fire, or a return to ''normal'' market conditions.

The airline cut capacity by 1.5 per cent compared to April last year, bringing the overall decline for the financial year to date to 1 per cent.

The release of the figures came after Qantas said last week it would freeze domestic capacity in coming months, citing weak consumer confidence and a slowdown in the mining sector. The decision abandoned its strategy of maintaining its 65 per cent share with the airline's chief executive Alan Joyce saying he was comfortable with 63 per cent.

Virgin shares are down 0.6 per cent at 41.75 cents, while Qantas is extending last week's rally by another 1.3 per cent to $1.3475.

10:52am: Researchers at Societe Generale point to “a very uneven global housing market”.

For ease of comparison, the SG analysts have indexed house prices to 100 in the first quarter of 2007, although they note that it “should be kept in mind that this does not take account of valuation levels at that time”.

“The best performers have been the economies generally perceived as “safe-havens” when the crisis began” – guess who? Australia and Canada.On SG’s scale they look around 40 per cent higher (compare that to Aussie stocks, which are still 9.6 per cent lower than then).

“UK housing prices are now above pre-crisis levels and while recovery is visible in the US, prices remain below the peak observed in early 2007.”

“The euro area in aggregate seems barely to have moved, but on a country basis the dispersion is striking.” Austria is the standout there.

Australian house prices are higher than they were in early 2007, pre GFC. Source: Societe Generale

10:43am:Japan’s Nikkei has climbed to a one-month high, extending its winning streak to a third day, helped by the yen's retreat and a closing record-high for Wall Street on upbeat U. housing data.

The benchmark index is up 0.7 per cent at 14,567, after rising as high as 14,592.60, a level last seen on April 22. The index has extended a rebound from a one-month low of 13,964 hit just on Wednesday.

Activity is light, partly as financial markets in London and New York are closed on Monday for public holidays, and the rally was blocked at a major resistance -- an Ichimoku cloud top at 14,600.

"The order flow this morning is severely crimped by holidays in the US and UK," said Stefan Worrall, director of equity cash sales at Credit Suisse in Tokyo. "While you have this extraordinary rally in the US, the key levels to look at here are 100 yen for the US dollar/yen and 14,000 for the Nikkei. Since we've bounced off in very light volume, it's too early to say we are out of the woods yet."

The yen retreated to 101.960 to the US dollar, from the 3-1/2 month high of 100.805 yen hit last Wednesday, providing some relief to investors worried that a strong yen will erode exporters' profits.

10:20am: Analysts at Deutsche Bank have chopped 5 per cent off their end-of-year forecast for the ASX 200 and become more cautious on mining stocks amid fears that a strong local dollar and weakening commodity prices will hurt corporate earnings in the coming months.

In a note to clients this morning, the broker said it was “taking some risk off the table” in response to what they see as a “mid-year swoon”, although they are quick to add they “are not moving outright defensive” as they “continue to expect a stronger earnings environment to emerge later in the year”.

The catalyst for this more defensive stance is a softening in the broker’s “profit pulse” (see chart below), a “timely” measure of earnings. And the next few months could stay soft due as:

Chinese momentum remains muted;

Europe has disappointed; and

Sentiment in Australia (both consumer and business) has weakened, partly due to the Federal Budget.

That has resulted in their year-end target for the benchmark index dropping to 5700, from 6000, and to 5900 for mid next year, from 6200.

The DB strategy team has moved their positioning in mining from overweight to “a small underweight”, but kept energy at overweight and banks underweight.

Mining stocks “do look cheap”, but could stay that way in coming months – not a concern for the longer term investor, although it suggests there may be some better entry points ahead.

“Newsflow from China’s steel and property sectors is weak, and macro data has not improved,” they write.

Energy is a favoured theme thanks to LNG projects coming on line, while the oil price is holding up.

They stay underweight banks – earnings outlook is “fine”, but they are “well priced”: “we prefer to get defensiveness and yield elsewhere”.

The defensive sectors they like – and are adding to – are general insurers, real estate and healthcare. They stay overweight utilities.

The DB strategists keep their exposure to Australian housing.

They add Suncorp, Westfield Retail, Sonic and Westpac to their model portfolio. They remove Orica, Nine Entertainment, Macquarie Group and NAB.

Deutsche Bank's sees a "mid-year swoon" in the market on weaker corporate earnings.

In a note to clients this morning, the investment bank claims the company is clearly for sale given the board’s decision to jettison its chief executive of six months, Stephen Porges, and engage with PEP.

The private equity firm’s indicative proposal ranges from $5.10 to $5.25 per share.

However, Moelis argues the price tag could hit $6 per share.

Analyst Ben Rundle maintains PEP has offered a “very cheap price” and points out the company’s register is wide open. “I think there is a high chance of other bidders emerging and this getting competitive. In the right hands I think it is worth $6.”

Moelis stresses that private equity is the “logical buyer of SAI” due to the opportunity to extract savings of around $30 million.

9:44am: The Budget does little to improve the efficiency of the economy, writes the indomitable BusinessDay columnist Ross Gittins:

According to Treasury secretary Dr Martin Parkinson, the budget is replete with ''structural reforms''. According to his boss Joe Hockey, it will ''drive the productivity required to generate economic growth''.

Sorry, not convinced.

As a vehicle for micro-economic reform, the budget gets less impressive the more I study it. Parkinson seems to be referring to reforms to the structure of the budget itself, which will build ''fiscal resilience'' over the coming decade.

That's true enough in terms of returning the budget to a sustainable surplus (business cycle permitting). In the process, however, the budget cuts will do little to raise the efficiency with which the government performs its own tasks, nor the efficiency of its interaction with private industries.

Rather than making what the government does more cost-effective, it just stops doing as much. It makes the federal government smaller, but not better. It's a giant exercise in cost-shifting: to people on pensions, to the young jobless, to university students, to the sick and, to the tune of $80 billion, to the states.

It's about crude spending cuts, not about using science to improve efficiency. Does anyone seriously believe imposing yet another temporary increase in the ''efficiency dividend'' on the public service will lead to cost savings without any decline in the quantity and quality of services provided to the public?

9:30am: Mining giants BHP Billiton and Rio Tinto have warned the combination of high costs, high taxes and the strong Australian dollar has put a "vice-like grip" on the $60 billion coal industry that will force further mine closures and job losses this year.

About 12,000 jobs have been cut from the sector over the past two years amid a string of mine closures and delays to projects by companies including BHP, Rio, Glencore, Vale and Peabody Energy.

BHP global coal president Dean Dalla Valle said there would be "difficult times ahead in a period of such oversupply", particularly given many operators are not making money at current depressed prices.

"You will see the industry adjust itself, shake itself out. You are going to see more exits from the market."

While both miners remain confident in the long-term outlook, they predict a brutal period ahead for the industry as prices remain under intense pressure.

The contract price of premium hard-coking coal has fallen to $US120 a tonne in the June quarter from $US330 a tonne in 2011, while thermal coal prices have dropped to $US74 a tonne on the spot market from $US125 in mid-2011.

Miners have been struggling to keep their Australian coal operations profitable amid deteriorating prices, surging costs and a high Australian dollar.

8:58am: Here’s what to watch out for in Australia over the week ahead, courtesy of AMP Capital’s chief investment strategist, Shane Oliver:

In Australia, March quarter construction data (Wednesday) is likely to remain weak as a rebound in residential investment only partly offsets the ongoing slump in mining investment and March quarter capital spending (Thursday) is expected to show a further decline.

Of greater interest will be capital spending intentions data which will show further weakness in mining investment but will be watched for signs that the outlook for non-mining investment is starting to improve.

Credit data (Friday) is likely to show a further modest lift in momentum.

And Oliver’s outlook for markets:

Shares remain vulnerable to a mid-year correction, consistent with weak seasonal influences that kick in around May and continue into the September quarter. However, with shares having been in a bit of a stealth correction all year, any pull back may well be mild and in any case the broad trend in shares is expected to remain up.

Share market fundamentals remain favourable with reasonable valuations, global earnings are improving on the back of rising economic growth and monetary conditions are set to remain easy for some time. So any dip should be seen as a buying opportunity.

Our year-end target for the ASX 200 remains 5800.

Bond yields are likely to resume their gradual rising trend as it becomes clear that US inflation has bottomed and this combined with low yields is likely to mean pretty soft returns from government bonds. Cash and bank deposits continue to offer poor returns.

With $A short positions now largely unwound, it’s likely that the broad downtrend in the $A is resuming.

Commodity prices remain relatively soft, interest rate hikes are getting pushed out and the $A is likely to revert to levels that offset Australia’s relatively high cost base.

NAB (underweight): “Fighting Fires” - We believe that NAB is underperforming in Australian banking. With loan loss normalisation largely complete, we expect profit and dividend growth to slow. We think downside risk to consensus estimates justifies a discount to peers.

8:38am:Facebook has eased concerns raised byCBA boss Ian Narev that it poses a strategic threat to the big four banks, after claiming it wants to grow users rather than create new banking services of its own.

Australian and international banks have been closely watching technology giants such as Facebook, Google and Apple for indications they might move into financial servicesand increasingly view them as competitive threats.

CBA chief executive Ian Narev has, on several occasions, pointed to the "strategic challenge" presented by the tech behemoths, suggesting they could harness their massive user bases to muscle in on payments or other banking services.

Such fears were elevated last month when the Financial Times reported Facebook was close to receiving regulatory approval in Ireland to allow users to store money on the site and pay and exchange money with other users.

However, Neil Hiltz, the global head of Facebook's financial services vertical, said moving into the payments business was not a focus for chief executive Mark Zuckerberg and Facebook had no intention to move into banking by holding deposits. Rather, he said Facebook would remain an intermediary between its users and financial institutions, who are increasingly big advertisers on the platform.

7:59am: As Challenger’s shares continue to climb to new heights, it is believed the annuities giant could be looking overseas for new avenues of growth, reports the AFR’s Street Talk column.

The group’s boutique incubator business, Fidante Partners, has been busy snapping up stakes in funds management businesses, and market talk is heating up as to whether the division could be looking to establish an overseas office. Challenger declined to comment.

One idea is that a Fidante-style business could be established in a European hub such as London. While Challenger’s UK staff are moving to Access Capital Adviser’s London office under the new Whitehelm banner, the fund annuities provider and fund manager may choose to retain a London presence while it evaluates further expansion opportunities into the European funds management market.

In 2013, Challenger’s Fidante Partners incubator signalled its increasingly offshore intentions with a stake in two London-based boutique fund managers, Wyetree Asset Management in fixed income and River & Mercantile in global equities.

Challenger’s funds management business recently added a new global equities and Australian shares boutique to its stable of managers.

Challenger’s shares closed at $7.35 on Friday – the highest in the company’s history.

7:56am:Horizon Oilhas secured a production development licence for its $US300 million Stanley gas condensates project in Papua New Guinea’s Western Province. A formal announcement is due as early as today in a move likely to bolster its planned $800 million merger with fellow energy player Roc Oil.

The licence has already been factored into the merger ratios and was largely expected. That said, it is another vote of confidence in the overall transaction and PNG’s burgeoning energy sector, which has expanded at a cracking pace over the past few years, fostering the growth of a number of smaller companies like Horizon and Kina Petroleum.

As the food chain extends these companies have become coveted by their larger rivals Inter Oil and Oil Search. For example Inter Oil, newly flush with cash from its Total joint venture, is thought to have set Horizon within its sights and was surprised at the sudden arrival of Roc Oil on the scene. More recently, Eaglewood Energy, which has exploration licences in PNG, was taken out by Transform Exploration for $US30.5 million ($33 million).

UBS values the Stanley project at 3¢ per share for Horizon, while Ord Minnett puts it at about 2¢ per share.

The licence also further undermines Allan Gray’s attempts to derail a merger between Roc Oil and Horizon Oil . The activist shareholder, headed in Australia by Simon Marais, claims to control 20 per cent of Roc Oil.

7:54am:SAI Global has revealed that private equity giant Pacific Equity Partners has approached it with a $1.1 billion takeover offer, and dumped its chief executive on a dramatic morning for the standards and risk management group.

SAI told the market this morning that it has received the “unsolicited, indicative, conditional and non-binding” proposal from PEP, valuing the company at $5.10 to $5.25.

SAI shares last traded at $4.28.

The company said that the board is yet to form a view about the takeover but says it is “open to engagement with PEP to determine whether a binding proposal” can be developed.

But the company, which was formerly known as Standards Australia, has also sacked its chief executive Stephen Porges, citing “fundamental differences of opinion between him and the board”.

SAI chairman Andrew Dutton will serve as executive chairman until a successor is appointed.

“Last week, it became clear to the board that we were unlikely to resolve the differences between the non-executive directors and the CEO regarding changes required and the pace of these changes to deliver the business improvements that we are seeking over the short to medium term,” Mr Dutton said in a statement.

7:51am: Is it scary that Wall Street is hitting new record highs but no-one’s particularly scared?

The CBOE Volatility Index, or VIX, closed on Friday at 11.36, its lowest level since March 2013. That means investors see less risk ahead, particularly with the S&P500 ending at a record high of 1900.53 on Friday.

"One of the reasons the VIX is so low, we haven't really done anything this year. We haven't moved an awful lot," said J.J. Kinahan, chief derivatives officer of TD Ameritrade in Chicago. For the year, the S&P 500 has gained just 2.8 per cent.

With the typically slow northern summer months just ahead and little on the horizon to shake the market from its current course, investors could be looking at even lower VIX levels, some analysts said.

"It's not that there's no likelihood of a correction. It's that people don't perceive anything to derail the train at this point," said Andrew Wilkinson, chief market analyst at Interactive Brokers. "So I think people are beginning to wonder: Are we heading back to single-digit volatility?"

The S&P 500's record high and the drop in the VIX are not the only signs that fear is not a factor on Wall Street.

Volume is down as well. S&P 500 E-mini futures volume was below the 1.52 million daily average of the past year on every day last week except Tuesday.

The market's gain has come despite concerns about a slowdown in China and weakness in small-cap names. Typically small-cap stocks lead the market's advance when the US economy is improving.

To be sure, some analysts say the lack of volatility suggests a complacency that could encourage excessive risk-taking. New York Federal Reserve Bank President William Dudley and Dallas Fed President Richard Fisher have both expressed such concerns in recent days.

"The lower the VIX, the more overbought the market gets, leaving it vulnerable to some kind of setback," said Donald Selkin, chief market strategist at National Securities in New York.

But the lack of volatility is also showing up in the foreign-exchange and commodities markets, according to Bespoke Investment Group analysts. They noted lower implied volatility in options in the foreign-exchange market as well as recent stability in the PowerShares Deutsche Bank Agriculture Index exchange-traded fund.

"If the VIX index is pricing in too little volatility, then why is it wrong to do so?" Bespoke analysts wrote.

Volatility in markets is low, both on Wall Street (white line: VIX) and locally (green line).

7:34am:Fixed mortgage rates look set to stay at historic lows for at least the next few months, as banks try to pinch each other's customers and investors bet the Reserve Bank will leave official rates on hold for longer.

While advertised variable mortgage rates have not moved since last August, home owners have been able to cut their monthly repayments by using fixed rates, which have been drifting down thanks to competition between lenders and changes in global markets.

Now experts are tipping fixed rates could stay low for several more months, amid predictions that the central bank will leave official rates at a record low of 2.5 per cent for another year.

In mid-April investors were tipping an 80 per cent chance of an official rate rise in a year's time, but on Friday this was about 25 per cent.

The change in expectations has caused fixed rates - which reflect the outlook for official rates - to continue falling.

Figures from RateCity show three and four-year fixed rates in particular have edged lower in the past month, while HSBC last week cut two-year fixed rates to 4.58 per cent.

ING Direct treasurer Michael Witts said he thought fixed mortgage rates were unlikely to rise in the short term, because markets had recently scaled back the chances of an interest rate hike from the RBA.

7:14am: Predictions that the Australian dollar could revisit parity within 12 months have some investment experts worried about the damage it could cause to corporate balance sheets and the domestic economy.

Expectations that the dollar could return to parity against the greenback come as it trades around US92¢, about 8¢ higher than where it started the year despite last week's fall in response to a lower iron ore price and a drop in consumer confidence.

The domestic economy remains fragile with growth below trend, the Reserve Bank's official cash rate at a record low of 2.5 per cent and lingering concerns that as the mining boom fades, growth in non-mining sectors may not be sufficient to fill the gap.

Westpac's chief economist Robert Rennie told Channel Nine's Financial Review Sunday that $195 billion in liquefied natural gas projects set to come online, starting from the second half of this year, could push the Australian dollar back to parity, when global growth remains weak and appetite for high-yielding currencies is high.

7:11am: The S&P 500 Index rose last week to a record and small-cap shares rebounded amid better-than-estimated data that boosted confidence in the strength of the world’s largest economy.

Tiffany & Co and Best Buy advanced at least 6 per cent to pace gains among retailers as profits topped forecasts. An index of homebuilders climbed 3.9 per cent as reports showed US home sales rose in April. The Dow Jones Internet Composite Index rallied for a second week, with TripAdvisor and Netflix posting the biggest increases in the S&P 500.

The S&P 500 climbed 1.2 per cent in the period to close at a record 1,900.5. The Dow Jones added 114.96 points, or 0.7 per cent, to 16,606.3, about 0.7 per cent below its closing high. The Russell 2000 Index of small companies ended a two-week slide, increasing 2.1 per cent.

“You have a constructive environment here,” John Fox, director of research at Fenimore Asset Management said. “Corporate profits are growing, interest rates are low,valuations are fair and you can earn a fair return in stocks compared to your other options.”

A gauge of US stock volatility known as the VIX dropped 8.7 per cent during the five days to 11.36, the lowest level since March 2013. The Chicago Board Options Exchange Volatility Index has retreated 47 per cent from a 14-month high in February.

Small-caps and Internet shares have started to recover after being among the hardest hit by a market retreat that began in early March. The Dow Jones Internet gauge surged 4.1 per cent for the week. It has rallied 5.4 per cent over the past 10 days, for the best two-week performance since September.

A group of technology shares in the S&P 500 finished the week at its highest level since 2000.

Quotes Search

Featured comment:

FGE downgraded to strong sell today on Commsec. Genius. Is it even possible to sell?

Commenter

Confused

Location

Date and time

May 26, 2014, 9:07AM

Sort comments by:

Been thinking about buying MTU, anything I need to be wary of?

Commenter

cyril

Location

Date and time

May 26, 2014, 1:27PM

The priceFOMOa correction before june 30thbout itbut been hovering for awhile liked it better at <550 didnt strike...now quietly wishing that level hits again..may not but patience is a discipline.

Commenter

BearshapedBull

Location

Longshots Lounge

Date and time

May 26, 2014, 1:47PM

Everything. The chart looks terrible.

Commenter

Bye Bye Fiat Money

Location

Date and time

May 26, 2014, 2:09PM

Here's a picture of the housing bubble for the bubble deniers:

http://www.abc.net.au/news/image/5252414-3x2-940x627.jpg

Commenter

Allan

Location

Prahran

Date and time

May 26, 2014, 1:02PM

That's true, but we are not US. Australia has had a migration boom in the last 20 years, they need to live somewhere, the asian and indian migrant culture is different, they will cut down on every discretionary spending possible to buy a house or two. You should get around and meet your new neighbours.

Migrants who have been here 5 years on minimum wage own their own homes, this shows their work-ethic, dedication and hardwork, they do not have a laid back attitude like the rest of us.

For them homes back in their homeland is unattainable, because the price of houses in comparison to their average earnings is multiple times higher than Australia. Here it is relatively it is still considerably cheap and yeah they do not look at your graphs before making their property purchasing decisions, will there be a bust like you suggest, me think not.

Commenter

me

Location

sydney

Date and time

May 26, 2014, 1:51PM

A lot of newer imigrant cultures also dont drink or smoke like australians/europeans...that frees up a lot of cash

Commenter

Wwwish Lion

Location

Melbourne

Date and time

May 26, 2014, 2:25PM

LOL the old Australia is different argument isn't going too cut it. Price rises have been on the back of a blow out in household debt and a sources boom that is now over.

Commenter

Allan

Location

Prahran

Date and time

May 26, 2014, 2:33PM

Of course there is house bubble. prices HAVE NOT been driven by increased immigration, but higher debt as a result of the RBA reducing interest rates to record lows.

Not all people who migrate here can afford to purchase. They may have to rent for a few years before even thinking about purchasing a home.

Hey Allan, Its a pretty graph but it hasnt taken policy and population growth into account. IE if more areas were opened to urban growth prices would be lower, if we didnt have the mining boom construction costs would have been lower as more tradies would be availoable for residential work. Doing a very basic trend line without considering influencing factors seems a little lazy.

Commenter

Wwwish Lion

Location

Melbourne

Date and time

May 26, 2014, 2:38PM

"The debate around the proposed deficit levy has so far focussed on the economic impact of the Federal Government's debt burden.

However, economists are warning there is a bigger threat to the country's future - the unrelenting growth in household debt."

Commenter

Dollar Mite

Location

Making cents but spending dollars

Date and time

May 26, 2014, 12:49PM

@Dollar, yes household debt levels are too high for comfort. However there is no salvation at hand because the latest Budget is going to cut household incomes further by reductions to benefits and increases in taxes and charges and co-payments. More debt to be added to the credit card. Then there's growing unemployment. Thanks Joe H.

Commenter

mitch of ACT

Location

Date and time

May 26, 2014, 1:12PM

A lot of people spending beyond their means , just to keep up appearances.

Commenter

me

Location

sydney

Date and time

May 26, 2014, 1:31PM

It's alright, the scientists are wrong, happy hippy has corrected the record.

Climate change isn't happening, but it is, because the Scots once grew grapes, but it doesn't matter because it will make things hotter which will lead to more rain (which is why Broken Hill is so damp), so our farmers will adapt to the hot wetness and have bumper crops and get rich. Thanks for clearing things up.

The scientific illiterates who comment on this blog are an embarrassment to themselves. Is it declining standards of science education in schools? Or is it the narcissism of today's society that makes all these people think "I know better than the world's scientists"?

Commenter

Fred

Location

Date and time

May 26, 2014, 12:28PM

@Fred, no it's just blind adherence to the ideology of their heroes that is overruling common sense in the face of evidence. The story of the frog in the pot applies to them. http://en.wikipedia.org/wiki/Boiling_frog

Commenter

mitch of ACT

Location

Date and time

May 26, 2014, 1:17PM

@Fred. As a qualified Oceanographer I am quite well placed to make an informed comment thankyou!So pitiful the warmster's have to resort to personal attacks. I have never said AGW...whoops...CC does not exist. It has always existed and always will.25 years of dire predictions and not one right...talk about head in the sand.

Commenter

happy Hippy

Location

Date and time

May 26, 2014, 1:30PM

@happy, how do you explain the continual breaking of heat records, even during the month of May. Natural variability won't cut it. New records are being set outside natural variability. The predictions of increasing extreme weather events and severity seems to be spot on to me. Check out the heatwaves graph here: http://www.theguardian.com/environment/southern-crossroads/2014/feb/21/extreme-heat-in-australia-more-longer-hotter

Commenter

mitch of ACT

Location

Date and time

May 26, 2014, 1:44PM

A Conservative Govt thinks that as long as the masses can read the Murdoch gutter press thats all they need. Just do what Rupert tells them.After all thats what Abbott does.

Commenter

Red Rooster

Location

Darkened Room

Date and time

May 26, 2014, 2:25PM

"As a qualified Oceanographer "

Explain the loss of Arctic ice:

http://www.youtube.com/watch?v=9OBCXWAHo5I&feature=youtu.be

Commenter

Allan

Location

Prahran

Date and time

May 26, 2014, 2:35PM

Can anyone recommend an ENERY stock that they like?

Commenter

Gumly

Location

Mackay

Date and time

May 26, 2014, 12:07PM

SXY. Hope I haven't just jinxed it...

Commenter

confused

Location

Date and time

May 26, 2014, 1:41PM

Poor old Gittins, seems a nice enough bloke, but reminds me exactly of my Level 1 Economics teacher at school 40 years ago. Absolute gobbeldy gook lingo, all theory, head scratching stuff and nothing to back it up.

Commenter

The Farmer

Location

Mudgee

Date and time

May 26, 2014, 12:02PM

Yet another one who doesn't like his naked emperor being exposed. If you didn't understand economics 40 years ago what hope do you have now. I first studied economics about that long ago but I have tried to keep up to date. What Gittens is saying makes sense. What Joe Hockey and his mob are saying does not but the IPA loves it and would have been right at home in Thatcherite Britain and the Reagan era.

Commenter

mitch of ACT

Location

Date and time

May 26, 2014, 12:22PM

@Mitch. Joe makes a lot of sense if you view him as a teabagger. Their aim is to shift wealth to the upper and upper middle echelons. Look around to see who is egging him on. Meanwhile I've had to dump JBH as it goes into a death spiral.

Commenter

Wally

Location

Flynn

Date and time

May 26, 2014, 12:32PM

When you've finished misunderstanding what Gittens has said you'd better have a go at this bloke too, a noted Australian economist.: http://www.smh.com.au/comment/tony-abbotts-budget-tax-strategy-lacks-conviction-and-logic-20140523-zrlwx.html#ixzz32e9r6Hps

Commenter

mitch of ACT

Location

Date and time

May 26, 2014, 12:34PM

More like Social Studies 101.

Commenter

SteveH.

Location

Date and time

May 26, 2014, 12:44PM

With the budget being release on the second Tuesday in May and the Sell in May and Go Away not showing its head as yet, perhaps the Sell in May and go away is only a Labor initiative unsupported by the Liberals ;)

Commenter

Wwwish Lion

Location

Melbourne

Date and time

May 26, 2014, 11:39AM

Was thinking along the same lines @Wwwish Lion

Commenter

craig

Location

Date and time

May 26, 2014, 12:20PM

"Rents are continuing to fall further behind a surge in home prices, leading to concerns that investors are mostly gambling on potential capital gains.

The lowest rental yields were in the two cities that have seen the strongest price growth over the past year, with Melbourne at 3.4 per cent and Sydney at 3.9 per cent."

The last parliament was a shables because of Rudd/ Gillard/ Shorten. Tony and Co. just capitalised on it.

Commenter

Wwwish Lion

Location

Melbourne

Date and time

May 26, 2014, 11:17AM

The last parliament was a shables because of Rudd/ Gillard/ Shorten. Tony and Co. just capitalised on it.

Commenter

Wwwish Lion

Location

Melbourne

Date and time

May 26, 2014, 11:17AM

The delay in the arrival of the "sell-off in May" is reminiscent of the late arrival of the Santa rally. That only happened from 19th Dec when the market went up 254 points between then and 31st Dec. Irrational. Punters piled in for fear of missing out. Didn't do them any good though. By 5th Feb it was down 264 points but rose again quickly afterwards. I think the same scenario is happening again. The perceived strength is dragging the punters in. Those with shares to sell will take advantage of the higher prices and sell-off. DB's forecast in the LHC of a 5% drop could very well be right. In previous years the market has dropped by a consistent 8% in each of the last 3 years towards 30th June. The market will then rise again in July as it almost always does. 11/12 was the exception out of the previous 5 years.

Commenter

mitch of ACT

Location

Date and time

May 26, 2014, 11:05AM

@Economic Those on higher incomes are whinging and whining and moaning about getting hit with a tiny deficit levy while content to let those on low incomes lose 10% and more of their already meagre incomes. "We are not responsible for the Budget deficit", they cry, "so why should we pay more". In many cases they may not be directly responsible, although a fair number haven't made a contribution to the Budget for years through taking advantage of the many tax concessions available to the well-heeled who can afford high level tax advisers and legal advice. Then of course there are those who engage in outright evasion. The well-off have been major beneficiaries of gov't stimulus expenditure in recent years as that has kept the level of economic activity much higher than it o/wise would have been and boosted their incomes from that activity and flow-ons to sharemarket prices and dividends. If the proposed Budget cuts to low income earners goes through then the level of economic activity will fall, as set down in the Budget papers, and drag share prices and incomes from the share market down as well. The well-off could very well take a bigger hit than the proposed 2% deficit levy.

Commenter

mitch of ACT

Location

Date and time

May 26, 2014, 10:39AM

Mitch. I can side with you here a little. I earn good money. I would much rather pay a little more tax if that means the recipients of welfare also received a little less. It is a win win. I give more to Tax who then pays less to those not working. MORE MONEY for the country to run.

@EC. Great to see that the Tea Party has some recruits on this forum. My observation is that Joe didn't bother to do enough propaganda work against the poor. Instead he seems to be relying on unnamed media outlets to do this work for him. Gittens is presenting an analysis on the data. If Joe was wanting a quick economic contraction so he can blame it the ALP then you are correct that the budget will be a fine success. Please explain why it is great for our economy.

Commenter

Wally

Location

Flynn

Date and time

May 26, 2014, 10:35AM

There's fruit to be picked. Get on with it!

Commenter

Allan

Location

Prahran

Date and time

May 26, 2014, 10:32AM

Explain to me again how a few weeks ago you were crowing about what you saw as poor house price growth over a decade yet you still call the housing market a bubble today. The logic is beyond me.

Commenter

guy

Date and time

May 26, 2014, 12:05PM

Roger! 700,000 unemployed on the way to Tassie! One apple each. Job done. Presto!

Tourism boom! GG.

Commenter

Gordon Gekko

Location

Greg Coffey World

Date and time

May 26, 2014, 12:14PM

I do agree that if there's seasonal work available and young unemployed in the area theres no reason these people should be paid to find something better. A motivation to work and a routine built from a young age does alot to teach ethics and also build some self esteem, sure it ain't no picnic but when was it ever supposed to be?aw shucks got nothin to do with the market.

Commenter

BearshapedBull

Location

Longshots Lounge

Date and time

May 26, 2014, 12:45PM

@BSB, also if you dont like your job, its a great motivator to get upskilled and get a better one.

Commenter

Wwwish Lion

Location

Melbourne

Date and time

May 26, 2014, 2:30PM

Gittens has called it right. It's just that some on here don't like the fact that their emporer's nakedness has been pointed out, time and time again. The Budget is an economy wrecker.

Commenter

mitch of ACT

Location

Date and time

May 26, 2014, 10:29AM

@1205 commentHey Ben is that after you guys brought in already?nah course not....

Commenter

BearshapedBull

Location

Longshots Lounge

Date and time

May 26, 2014, 10:16AM

What is happening at Kingsgate? Has the ASIC investigation concluded? Share price keeps going down.

Commenter

bruiser

Location

Date and time

May 26, 2014, 10:10AM

Challenger break even weighing...costs of $1297 all in looking uneconomical with bearish gold futures...instability in thailand unnerving,chartree mine = thailandyou read their reports or what?

Commenter

BearhapedBull

Location

Wont touch'em

Date and time

May 26, 2014, 12:30PM

I do. Nothing about ASIC investigation over Thailand "payments". Price tanking so badly today I thought there might be something coming out.

Commenter

bruiser

Location

Date and time

May 26, 2014, 1:16PM

Tony Abbott & Labor be warned. Thanks to his nickel holdings and soaring nickel prices, Clive Palmer will be well and truly cashed-up in time for the next election and able to fund a concerted campaign in both Houses. Clive could easily become the de-facto PM by having the balance of power in both Houses as disaffected voters from both major parties and candidates flock to support his party. Clive Palmer is Tony Abbott's just reward for making the last Parliament such a shambles that any jumped- up, self-opinionated billionaire thought he could do a better job. http://www.businessspectator.com.au/news/2014/5/23/resources-and-energy/palmers-net-worth-soars-nickel-price

Commenter

mitch of ACT

Location

Date and time

May 26, 2014, 10:08AM

Gittins, can you leave the economic and share market forum to those who know what they are talking about and go back to your shrill front page articles written for economic illiterates who have never invested any of their own many in Australia's corporate survival. You are just so out of place on this forum.

Commenter

Economic Credibility

Location

Date and time

May 26, 2014, 10:08AM

Gittens has called it right. It's just that some on here don't like the fact that their emporer's nakedness has been pointed out, time and time again. The Budget is an economy wrecker.

Commenter

mitch of ACT

Location

Date and time

May 26, 2014, 10:29AM

@EC. Great to see that the Tea Party has some recruits on this forum. My observation is that Joe didn't bother to do enough propaganda work against the poor. Instead he seems to be relying on unnamed media outlets to do this work for him. Gittens is presenting an analysis on the data. If Joe was wanting a quick economic contraction so he can blame it the ALP then you are correct that the budget will be a fine success. Please explain why it is great for our economy.

Commenter

Wally

Location

Flynn

Date and time

May 26, 2014, 10:35AM

ASX has only crossed the 5500 barrier 3 times today (about to be 4). I have a side bet with a mate that it will do so10 times. He gave me odds of 3 - 1 so I could not refuse! Still confident.

Commenter

Gumly

Location

Mackay

Date and time

May 26, 2014, 9:59AM

Yes it will be hard to see people being confident about investing in Australian companies the way everyone in Australia wants to tax them into oblivion as the solution to their need to find a way to spend on themselves forever without earning their own money.

Commenter

Economic Credibility

Location

Date and time

May 26, 2014, 10:17AM

broken through me thinks...look out here comes 5555,lead by MQG.....the thai word for 5 = ha so hahahaha to shorters

Commenter

BearshapedBull

Location

Longshots Lounge

Date and time

May 26, 2014, 10:30AM

Don't forget that Wall St is closed tonight for the Memorial Day holiday. The ASX will be like a headless chook tomorrow with no lead to follow.

Commenter

mitch of ACT

Location

Date and time

May 26, 2014, 9:52AM

Perhaps the "Sell in May and go away" thing has not happened as in previous years the market had very good first quarters whereas this year we had an ordinary first quarter?

Commenter

Gumly

Location

Mackay

Date and time

May 26, 2014, 9:49AM

@1130 comment"One in 10 tonnes produced at Queensland coal mines made a loss of more than $14 a tonne"Shut em down now

Commenter

BearshapedBull

Location

Longshots Lounge

Date and time

May 26, 2014, 9:47AM

Abbot Point in QLD is losing its backers. http://www.abc.net.au/news/2014-05-23/deutsche-bank-abbot-point-coal-terminal/5473614?section=business That was as a result of poor economics on the project and activists in Germany campaigning against the bank financing the project. Hopefully the project stops before the GBR is destroyed.

Commenter

mitch of ACT

Location

Date and time

May 26, 2014, 10:14AM

GDY and BPT putting their heads together looks like a breath of fresh air for GDY holders showing a lil hope for a SP rise after stagnant year so far,a farm in deal working both ways but only localized industry to benefit...not alot else out there.Interesting stuff.

Commenter

BearshapedBull

Location

Longshots Lounge

Date and time

May 26, 2014, 9:43AM

Thanks BSB, I hadn't heard about that.

GDY has had me in tears this year.

Commenter

Fred

Location

Date and time

May 26, 2014, 9:53AM

"Risks are skewed to the downside for the big banks, Morgan Stanley writes in a note published late last week:"

Nah... they go up and up and up forever n eva! wheeeeeeeeeee!

Commenter

Allan

Location

Prahran

Date and time

May 26, 2014, 9:38AM

do you have any thoughts on what CBA is worth?

Commenter

dewf hart

Location

Date and time

May 26, 2014, 9:53AM

"the combination of high costs, high taxes and the strong Australian dollar has put a "vice-like grip" on the $60 billion coal industry that will force further mine closures and job losses this year."

Coal smashed. Iron ore smashed. China property bust.

Housing boom!

Commenter

Allan

Location

Prahran

Date and time

May 26, 2014, 9:37AM

meanwhile the bull market continues on its merry way...5500 and going up!

Commenter

Mister5100

Location

Date and time

May 26, 2014, 9:49AM

I am not sure if 14 stocks going on a rally can be counted as a bull market. However, I am happy to watch my super follow it up! I cant even count the number of stocks trading at below GFC levels now...

Commenter

Liberator

Location

SEQLD

Date and time

May 26, 2014, 10:50AM

11.30 post.

There is no future for coal.

Commenter

Fred

Location

Date and time

May 26, 2014, 9:37AM

Price of Russian gas into China is 40% lower than Australian gas. Origin is 40% over priced. Coincidence?

this is true. They are in a death squeeze between DJs, Zara, Topshot, H&M etal, and no partners left on the dance floor. Since selling off their real estate there is nothing to fall back onto. Will fold

Commenter

arbinater

Location

box hill

Date and time

May 26, 2014, 9:45AM

Double ORG short at 15.25. Thanks for the heads up. Gift.

Commenter

Allan

Location

Prahran

Date and time

May 26, 2014, 9:21AM

I got my last short wrong and the price went up so im trying again to double in.

Commenter

Wwwish Lion

Location

Melbourne

Date and time

May 26, 2014, 11:28AM

AMP Capital’s chief investment strategist, Shane Oliver has a lot of opinions for a guy whose company's share price is 65% lower than it was 16 years ago.

BTW long QAN at 1.09. Up 22%. Love it!

Commenter

Allan

Location

Prahran

Date and time

May 26, 2014, 9:18AM

AMP sees the $A slipping,LNG production boosting it back to parity with US...glad they'll all in agreement,if one cancels out the other the $A should be flat for rest of 2014....possibly.

Commenter

BearshapedBull

Location

Longshots Lounge

Date and time

May 26, 2014, 9:16AM

FGE downgraded to strong sell today on Commsec. Genius. Is it even possible to sell?

Commenter

Confused

Location

Date and time

May 26, 2014, 9:07AM

FGE now finally declared worthless. Commsec just rubbing salt in wounds with downgrade....At least the capital loss can now be claimed. Not all bad news....

Commenter

confused

Location

Date and time

May 26, 2014, 9:30AM

CAJ releasing some "wait and see" impact to business news after the budget changes "if they get through" senate...i'm a buyer @ 45c,thought the growth for them had stopped but looking like a takeover target for the bigger peers me thinks.only a punt as usual.

Commenter

BearshapedBull

Location

Longshots Lounge

Date and time

May 26, 2014, 9:06AM

It's a usual thing to deny something is going to happen before it actually does. So, what do you think? Facebook to become Facebank? GG.

Commenter

Gordon Gekko

Location

Greg Coffey World

Date and time

May 26, 2014, 8:59AM

It would start no differently to any other bank. Backers to fund it. The only difference is, it would use the Brand to infiltrate as far possible. The new world bank! You could do a status update whenever your pay goes in!

Commenter

Liberator

Location

SEQLD

Date and time

May 26, 2014, 9:51AM

@1050 commenteasy to be an analyst in hindsight...RRL cut to neutral from buy after the punters bought and it tanked...awesome.and just for histories sake the following reminder about advice..Foolish takeaway:Forge is demonstrating the good reputation it has in the mining industry by being awarded multiple large contracts in 2013, when the sector as a whole is struggling. With cash in the bank and growing order book, Forge is well placed to outperform its peers and register solid share price growth in the coming year if all contracts are executed successfully.......more the fool that listened.

Commenter

BearshapedBull

Location

Longshots Lounge

Date and time

May 26, 2014, 8:56AM

The Market likes it!

Its G for Go, thanks to Joe

Commenter

craig

Location

Date and time

May 26, 2014, 8:54AM

@craig, read Ross Gittens article on the LHC. The Budget will do nothing to improve the economy. Rather, by contracting gov't spending, the reverse could be true. That infrastructure spending on roads had better start soon but $billions in State assets have to be sold first. That's a long process. I do wish basic economics was taught in schools. The electorate would not have been fooled so easily by coalition spin

Commenter

mitch of ACT

Location

Date and time

May 26, 2014, 9:59AM

So Labor aren't the true believers? Apparently studying economics to uni doesn't help much either.

Commenter

Titch of ACM

Location

Date and time

May 26, 2014, 1:02PM

Risks to the downside for the Banks and TLS they say. Westpac today a 7.9% fully franked grossed up yield and Tls 7.7%. Interest rates to remain low. So BUY in July and again in September and when your dividends come in you'll have a great December.

Commenter

Goldfinger

Location

Sydney

Date and time

May 26, 2014, 8:50AM

CBA at record high. Mum and Dad investors will be dancing in the streets.

Anyone short?

Commenter

which bank?

Location

Date and time

May 26, 2014, 8:44AM

Yep. Last add at $81.50. Pollyannas aren't gonna know what hit em.

Market is 30% lower than seven years ago but somehow banks are making record profits. Look hard and you'll see what's wrong with that picture.

Commenter

Allan

Location

Prahran

Date and time

May 26, 2014, 9:35AM

When premonition and charts don't work blame it on the weather or the politicians.

Expert commentary ??

Commenter

Harry Rogers

Location

Date and time

May 26, 2014, 8:41AM

@Harry, best I've got to go on at the moment because I haven't killed one of my chickens lately. I just love those fresh-laid eggs.

Commenter

mitch of ACT

Location

Date and time

May 26, 2014, 8:56AM

Mitch,your guesses are as good as the paid ones we all lay eggs just some have no sense of humour.

Commenter

Harry Rogers

Location

Date and time

May 26, 2014, 9:42AM

DWS ticking over nicely after some encouraging words from the CEO,light vols but heading north.

Commenter

BearshapedBull

Location

Longshots Lounge

Date and time

May 26, 2014, 8:40AM

@951am commentwhy be scared,everytime the Dow rises its a new record,surely a better US economic outlook and lack of investment choices for punters means...its the only place to get a return, and with all the "free cash" piling out of the press" things will keep steaming ahead until at least october...when the press' stop may be the time to get scared.

Commenter

BearshapedBull

Location

Longshots Lounge

Date and time

May 26, 2014, 8:37AM

BDR confirms further ultra high grade gold results at Duck Head mine.Read latest announcements before making any trade,I hold shares.

Commenter

Harry Rogers

Location

Date and time

May 26, 2014, 8:36AM

yes when you compare those ore yields to RRL latest updates of 0.94 & 0.66g/t its clear skies from here surely...the "motherlode"

Commenter

BearshapedBull

Location

Longshots Lounge

Date and time

May 26, 2014, 8:47AM

Nice results Harry, I am not normally into Goldies, but this one looks good at the price. I do hold a few PIR as they look pretty awesome in the near future. They are in a Trading Halt this morning which will be interesting!

Commenter

craig

Location

Date and time

May 26, 2014, 8:59AM

Good luck to all. Remember its all just a game..win some lose some.

Commenter

Harry Rogers

Location

Date and time

May 26, 2014, 9:50AM

hmm market realizes its old news anyways and SP goes in reverse?

Commenter

BearshapedBull

Location

Longshots Lounge

Date and time

May 26, 2014, 10:00AM

Got out of DRM today and happy

Commenter

Red Rooster

Location

Darkened Room

Date and time

May 26, 2014, 2:29PM

Sell and go away in may, come back because mabye this year is different, go away again because it must happen now that it hasnt already

Commenter

Wwwish Lion

Location

Melbourne

Date and time

May 26, 2014, 8:34AM

"history never repeats i tell myself before before i join the sheep"..or something like that

Commenter

BearshapedBull

Location

Longshots Lounge

Date and time

May 26, 2014, 9:32AM

We're doomed to repeat the past no matter what. That's what it is to be alive. ― Kurt Vonnegut

Commenter

Wwwish Lion

Location

Melbourne

Date and time

May 26, 2014, 11:33AM

PRR gets the green light for patenting Cvac cancer treatment...alot of good news from the company fails to boost shares more than 6-10% sustained....aw well prospects are still growing after a very successful May

Commenter

BearshapedBull

Location

Longshots Lounge

Date and time

May 26, 2014, 8:33AM

ORG $15.25 and showing no signs of stopping. You have to like that.

anyone short at $12 would be feeling the pain...

Commenter

ORGan donor

Location

Date and time

May 26, 2014, 8:30AM

long @ 11.74 and feeling like its about time...come on 16 bucks

Commenter

BearshapedBull

Location

Longshots Lounge

Date and time

May 26, 2014, 8:43AM

"Is it scary that Wall Street is hitting new record highs but no-one’s particularly scared?" Markets live 26/5.

This is where crashes occur. The VIX was low in 2007, and along came the big one, and down she went. Crashes occur when no-body is looking; when everbody 'thinks' it's going to go up forever; when the wind is still; when the waves are calm; and suddenly...ALL HELL BREAKS LOOSE! GG.

Commenter

Gordon Gekko

Location

Greg Coffey World

Date and time

May 26, 2014, 8:27AM

VIX seems to work retrospectively with the dives...after the event its up,so only reflecting on the spilt milk.other factors that are geo-political tend to heighten it in the present tense.

Commenter

BearshapedBull

Location

Longshots lounge

Date and time

May 26, 2014, 12:09PM

Remember all of the fuss on here last week about the unemployed not being prepared to train or look for work, well here's a story to set those who are criticising people for being on the dole back on their self-satisfied, smug and over-critical haunches. Despite spending years being trained here and running up a HECS/HELP debt in the process, there are around 3,000 locally-trained nursing graduates out of work in Australia. Instead of employing locals, employers are importing nursing staff from o/seas on 457s. The 457 program is supposed to be for the more highly-specialised jobs that a fresh graduate would not be able to handle, eg operating theatre and critical care, but I suspect that low-trained staff are being imported as well. I know that when I visit old friends in their nursing homes the majority of the care staff are from Sri Lanka or India. I do wonder about the quality of care because the class/caste system is very active in those countries and certain jobs are regarded as distasteful and looking after old people doesn't have the same cachet as looking after babies. The type of care required can be similar but one is looked down on while the other is embraced. http://www.abc.net.au/news/2014-05-24/thousands-of-nursing-graduates-unable-to-find-work/5475320

Commenter

mitch of ACT

Location

Date and time

May 26, 2014, 8:26AM

I thought the market was supposed to be at 2800pts already?

Commenter

Particularly

Location

Confused

Date and time

May 26, 2014, 8:19AM

Feeling very lucky that I bailed on my Regis punt Friday. That small gamble would have turned out to be quite a moderate loss today! :O

Commenter

GS

Location

Date and time

May 26, 2014, 8:16AM

So where are we going today. Recent history says we will drop 50 - 70 points today.

I think today will be different and buck the trend

Commenter

cyril

Location

Date and time

May 26, 2014, 8:04AM

Experts are tipping??? Why does anyone print (pay?) commentators for dart board guesses about interest rates? How long until there's a realisation that they just reset their guess every month? They seem to just keep trying to extend the time frame. How can any credible economics commentator manage to start a sentence with "In one year, interest rates will be..."?

Commenter

Peter

Location

Oz

Date and time

May 26, 2014, 7:56AM

Because once every year they get a call right and they tell everybody but unfortunately they then forget about their other 11 calls. ( Guesses )

Commenter

Goldfinger

Location

Sydney

Date and time

May 26, 2014, 8:41AM

Who cares what they say, just look @ the 30 day bank bill yield curve.....

Commenter

Bye Bye Fiat Money

Location

Date and time

May 26, 2014, 8:46AM

So when will the penny drop for the RBA. Australian interest rates are still too high and no amount of talking will bring the $AUD towards 80 cents. The simple answer is to cut interest rates, starting in June.

Commenter

Xenaphon

Location

Date and time

May 26, 2014, 7:56AM

You sir, are a genius! (note: sarcasm)

Weaker dollar = higher inflation. The AUD is fine where it is. Trying to beat the other CBs @ competitive devaluations is a suckers game.Otherwise go see if you can get a seat on the RBA board, maybe you can jawbone the currency down, or convince 'em to ramp up the printers sooner rather than later.

Commenter

Bye Bye Fiat Money

Location

Date and time

May 26, 2014, 8:43AM

As there is no real good or bad news.. the press will say Investors are profit taking so the ASX will fall 1% which is then going to bounce on reaction to some other overseas news.. who actually looks at fundamentals anymore

Commenter

Lean too

Location

Date and time

May 26, 2014, 7:31AM

it will be a quiet day, range 30 points max.

Commenter

me

Location

sydney

Date and time

May 26, 2014, 7:47AM

Unfortunately fundamentals don't seem to be relevant at the moment, only what the Fed reserve does or says.

Commenter

Grizzly Adams

Location

Date and time

May 26, 2014, 8:45AM

Sold my BHP a week ago thinking sell in May and go away might hold true this year.

Already second guessing myself.

Commenter

Fred

Location

Date and time

May 26, 2014, 7:30AM

Not directed at you in particular Fred but it amazes me how most posters here seem to think their keen observations, insights and wisdom on what's driving the market are much more than rationalisations and guesses. That includes whoever's filling out the blog to the left.People connect the market with external events in a way that makes sense to them. It gives them a sense of being in control (e.g. Sell in May)

Commenter

Peter

Location

Oz

Date and time

May 26, 2014, 7:45AM

Whether to sell was the right decision all depends on what you did with the cash. Hopefully you have found a stock with good prospects and even an upcoming dividend in the June-July cycle. I can't see much happening with BHP until closer to its reporting date in Feb 15 when hopefully an off-market share buyback will be announced with a large component of the buy-back price being a fully-franked dividend.

Commenter

mitch of ACT

Location

Date and time

May 26, 2014, 7:54AM

This May uptrend is a bit of a surprise and counter-cyclical. Perhaps it has something to do with the warmer than usual May weather not putting a chill into the markets. Perhaps the stark reality of how the Budget will depress the economy hasn't sunk in yet or the market is anticipating that the Senate will block the worst of the Budget measures. That deficit levy won't dent economic activity at all despite what the well-off bleaters may say. They should hang their heads in shame at being ok with the devastating cuts to low income earners, that will hurt the economy, but wanting to protect the tiny dent to their own incomes.

Commenter

mitch of ACT

Location

Date and time

May 26, 2014, 8:03AM

Then again Mitch the upswing may be a result of people deciding the budget was gutsy and good politics and if this beautiful weather is a result of climate change...well bring it on.Never understood the conservative thinking of the warmsters...so afraid of change I suppose. A warmer world is so much better than a colder world and the only fact we do know is that it never stays the same

Commenter

happy Hippy

Location

Date and time

May 26, 2014, 8:34AM

New saying: Sell in June, May's too soon?

Hang in there Fred, you've done the right thing. It's just a bit of OS money propping up the market due to fresh talk of impending AUD parity with the USD (double bite of the cherry on top of any other share gains, or at worst, a bit of a hedge against any share drops). Also a bit of naive new SMSF money buying into bank shares that look cheap compared to a few weeks ago. All up, it's pretty flaky bolstering so I'd sit tight until late June.

Commenter

Gareth

Location

Sydney

Date and time

May 26, 2014, 8:36AM

@happy, and how much of your hard-earned cash do you want to go to pay drought aid to farmers in an era of ever-worsening heat waves.

Commenter

mitch of ACT

Location

Date and time

May 26, 2014, 8:52AM

I have to say, great posts this morning fellas, keep it up!

Commenter

Human Trader

Location

Sydney

Date and time

May 26, 2014, 8:53AM

The "Sell in May, go away" saying does not mean that markets will plummet over our winter, it means that markets are usually very quiet and tend to meander. This is because there are few company announcements, few US elections and there's a month of school hols in the northern hemisphere.

But its based on history and, like the Xmas rally, has a ~70% probablility.

At the moment stocks are well priced so without additional news, the index is likely to meander between about 5300-5600 unless soemthing unexpected occurs.

Peter, unless you have proof that a method doesn't work then your 'observation' has even less value!!

Commenter

Life Is Good

Location

The Real World

Date and time

May 26, 2014, 8:58AM

@Gareth,"Sell in June, May's too soon". I like it. Bought in July, I wonder why. Bought in August, sold in disgust. Bought in September, why I don't remember.

Commenter

mitch of ACT

Location

Date and time

May 26, 2014, 9:01AM

@Mitch. It would be more practical than paying a tax that was going to do nothing to change the climate, but certainly disadvantage our international competitiveness.You admitted the other day higher temps lend to higher rainfall. Farming always adjusts to climate variability...vineyards were common in Scotland in late Roman times. Adaption is the key...not taxes

Commenter

happy Hippy

Location

Date and time

May 26, 2014, 11:53AM

@happy, yes higher temperatures can lead to higher rainfall. Good for farmers but not so good through the heart of Brisbane or through parts of NSW & Vic that have never flooded before in settled history.

Commenter

mitch of ACT

Location

Date and time

May 26, 2014, 12:26PM

@happy "A carbon tax raises revenue which can be used to fund services or reduce other taxes. The subsidies paid out under Direct Action need to be funded by cutting other services or raising taxes. Ironically the best way to fund Direct Action policies would be through a carbon tax but the downward spiral of our political process is way past the point where options like that could be considered."http://www.smh.com.au/comment/tony-abbotts-budget-tax-strategy-lacks-conviction-and-logic-20140523-zrlwx.html#ixzz32nEjTOKQ

Commenter

mitch of ACT

Location

Date and time

May 26, 2014, 12:36PM

@Mitch. Are you saying Brisbane has never had floods? That one a few years back was nothing. Have a look at the monsters of the late 1800's...1883 in particular. Of course if they occurred like that now you and Fred would be shouting from the roof tops' were all gunna die'

Commenter

happy Hippy

Location

Date and time

May 26, 2014, 1:37PM

Warmer more humid planet? It's all good for mosquito borne viruses, healthcare and big pharma.

Clearly the people of Europe are showing they are sick of their ruling class. A political revolution, and it is gaining speed.

Commenter

Fred

Location

Date and time

May 26, 2014, 7:13AM

yes noted

Commenter

mushy

Location

Date and time

May 26, 2014, 8:09AM

Fantastic result for UKIP and Front National, but we must remember that the European Parliament is a paper tiger with no legislative power whatsoever. Its only purpose is to create the illusion of people representation on supranational level.

The national conservative parties must build on this result and win national elections in their respective countries now in order to make real difference.

Whatever happens on the markets today I'll open a bottle of French champagne for Marine Le Pen tonight!